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Baldwin Enterprises has two service departments, Personnel and Legal, and two operating divisions, Eastern and Western. Personnel costs are allocated on the basis of employees and Legal costs are allocated on the basis of hours. A summary of Baldwin operations follows: Employees Hours Department direct costs. Personnel 10,800 $430,000 Legal 40 $ 290,000 Eastern 120 5,400 $ 1,330,000 Western 40 1,800 $ 920,000 Required: a. Allocate the cost of the service departments to the operating divisions using the direct method. b. Allocate the cost of the service departments to the operating divisions using the step method. Start with Legal. c. Allocate the cost of the service departments to the operating divisions using the reciprocal method.

Baldwin Enterprises has two service departments, Personnel and Legal, and two operating divisions, Eastern and Western. Personnel costs are allocated on the basis of employees and Legal costs are allocated on the basis of hours. A summary of Baldwin operations follows: Employees Hours Department direct costs. Personnel 10,800 $430,000 Legal 40 $ 290,000 Eastern 120 5,400 $ 1,330,000 Western 40 1,800 $ 920,000 Required: a. Allocate the cost of the service departments to the operating divisions using the direct method. b. Allocate the cost of the service departments to the operating divisions using the step method. Start with Legal. c. Allocate the cost of the service departments to the operating divisions using the reciprocal method.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Baldwin Enterprises has two service departments, Personnel and Legal, and two operating divisions, Eastern and Western. Personnel costs are allocated on the basis of employees and Legal costs are allocated on the basis of hours. A summary of Baldwin operations follows: Employees Hours Department direct costs Required A Required B Required C From Complete this question by entering your answers in the tabs below. Department costs Legal allocation Personnel allocation. Total costs $ Personnel $ 10,800 $430,000 Required: a. Allocate the cost of the service departments to the operating divisions using the direct method. b. Allocate the cost of the service departments to the operating divisions using the step method. Start with Legal. c. Allocate the cost of the service departments to the operating divisions using the reciprocal method. Legal 290,000 $ (290,000) Legal 0 $ 40 $ 290,000 Allocate the cost of the service departments to the operating divisions using the step method. Start with Legal. Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollar values. Amounts to be deducted should be indicated by a minus sign. To Personnel Eastern 430,000 $ 1,330,000 $ 920,000 Eastern Western 120 5,400 $ 1,330,000 430,000 $ 1,330,000 $ 920,000 Western 40 1,800 $ 920,000
Transcribed Image Text:Baldwin Enterprises has two service departments, Personnel and Legal, and two operating divisions, Eastern and Western. Personnel costs are allocated on the basis of employees and Legal costs are allocated on the basis of hours. A summary of Baldwin operations follows: Employees Hours Department direct costs Required A Required B Required C From Complete this question by entering your answers in the tabs below. Department costs Legal allocation Personnel allocation. Total costs $ Personnel $ 10,800 $430,000 Required: a. Allocate the cost of the service departments to the operating divisions using the direct method. b. Allocate the cost of the service departments to the operating divisions using the step method. Start with Legal. c. Allocate the cost of the service departments to the operating divisions using the reciprocal method. Legal 290,000 $ (290,000) Legal 0 $ 40 $ 290,000 Allocate the cost of the service departments to the operating divisions using the step method. Start with Legal. Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollar values. Amounts to be deducted should be indicated by a minus sign. To Personnel Eastern 430,000 $ 1,330,000 $ 920,000 Eastern Western 120 5,400 $ 1,330,000 430,000 $ 1,330,000 $ 920,000 Western 40 1,800 $ 920,000
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